Is new Winter Fuel Payment £35,000 threshold for a person or a family? STEVE WEBB replies

Is the new £35,000 threshold per pensioner or per household? Individually both myself and my partner have less, but combined we are over it, so will we receive a Winter Fuel Payment?

Steve Webb replies: The Government has announced it is going to change the way Winter Fuel Payments are paid, starting from this winter. 

Although we are still waiting for some of the finer details, we know enough to have a good idea how the new system will work.

The first thing to say is that Winter Fuel Payments will now be paid automatically to all, without the need for a claim. 

This is essentially how things used to work up until last winter. Even if you didn’t get a WFP in winter 2024 because you were not on pension credit, you will get a payment in winter 2025, and don’t need to take any action.

However, the catch is that for higher income pensioners there will be a claw back.

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The Government has said the definition of higher income is any individual whose taxable income is above £35,000 per year. 

This includes things like state pensions, company pensions, annuities, taxable investment income and so on, but not things like tax-free benefits such as Attendance Allowance.

Note that as far as we know it is likely the £35,000 figure will be fixed, at least for the next few years.

The key point is although Winter Fuel Payments are assessed on a household basis, the means-test will depend on your individual income.

If we consider your case as a couple, and assume for now that you are both under 80, in future you will be entitled to £200 in Winter Fuel Payments as a household and this is split as £100 each.

Provided that neither of you has *individual* income above £35,000 you will both continue to get your WFPs. This is despite the fact that your combined income is above this level.

If one of you had an income above £35,000 then your share of the WFP – £100 in your case – would be clawed back through the tax system.

In terms of how this money will be collected, the Government has been at pains to stress that pensioners who do not currently file a tax return will not have to start doing so.

Instead, what will happen is that HMRC will do an end-year review of your circumstances and if your taxable income was over £35,000 they will seek to recover your share of the household WFP.

If you do not fill in a tax return they will do this by using the ‘tax code’ which is sent to whoever pays your company pension or private pension. 

The pension provider will simply deduct an extra £100 from your pension over the course of the following twelve months.

I suspect in practice that most people with incomes over £35,000 are either getting a company or private pension (and hence have a tax code) or file a tax return. 

If neither of these is true then it’s likely that HMRC will use the ‘simple assessment’ system and send an end year tax demand to recover the WFP.

Finally, one issue that has concerned people is whether HMRC will be chasing the families of people who have died after receiving their WFP but before it can be clawed back.

The Government has said that if this is the *only* outstanding item of tax due then they will not seek to collect it, but if the WFP is simply part of the total outstanding income tax due then it will be added in.